Web3: Will Lawyers Build or Break our Metaverse? — Legalcomplex
Web3 is the shift from platforms to protocols. More importantly, it is our only path to digital privacy…but only if lawyers get involved.
Web3 is the single biggest topic we ever attempted to tackle. Let’s chop it up into the three essential parts: payment, privacy, and power.
Problem: there is no trust built into our current web infrastructure. We have to trust a few platforms to handle the transmission of critical personal information. Google handles our searches, Facebook our conversations, Amazon and Alibaba our purchases.
Solve: introduce trust using transparent transmission via blockchain-inspired protocols. Web3 handles sensitive transactions, like payments, with decentralized protocols rather than a central platform owned by one company.
If you like to visualize what Web3 is, check our NFT analysis. NFTs are like Polaroids and NFT marketplaces, like OpenSea, are shopping malls. Now zoom all the way out and imagine terraforming Mars to have it become our new Earth. That is Web3: using ledger tech to rebuild the pipes that transmit our data over the web. Whoever lays down the plumbing first, gets to figure out the business model. So when the first images of Bored Humans on Mars hit the web, we’ll be scrambling to get tickets. Why? This new network offers us something we currently do not have: privacy.
We all know privacy is important, but not many can articulate why. In one word, privacy means freedom. You can only be free if you make decisions without influence or pressure from others. Our likes, searches, conversations, and purchases define who we are. Subconsciously, we are herded into shopping for something we don’t need or, worse, electing a leader we don’t want. Currently, no single authority has demonstrated handling this power fairly. Remember when all iOS users got U2 songs on their phones? Absolute power corrupts absolutely. If we want our privacy back, we need to distribute our data.
Technology that distributes data among peers has been around for a while. BitTorrent, and its precursors, allowed us to exchange large files over a shared bandwidth. Blockchain took this a step further by outright minting money. These networks had one thing in common: once it got going, it was impossible to stop. There wasn’t a central authority to pull the plug, and the participants enjoyed a little anonymity. Yes, bad actors did abuse these systems. Only because there was no law enforcement or any social constraints. However, constraints and enforcement are just social contracts that we can build into the protocols. How would that work? Here’s a design called LawKit: a framework to distribute authority in a virtual universe.
This brings us to our final point: power. Facebook had to drop their Libra project: a Facebook digital currency. Subsequently, Meta lost $251 billion, the biggest wipeout in the history of the stock market. All in their attempt to build a single platform. In contrast, Apple is worth trillions because they offer end-to-end secure transmissions with biometrics stored on your device. That’s why they are ‘rushing’ Apple Pay to merchants. Meanwhile, over at the Winter Olympics, you can now pay with e-CNY, china’s digital currency.
Web3 requires massive investments, and the west will exclusively fund this through the private sector. Check the image above: three Meta projects collectively raised almost a billion in just a single week. It’s so chaotic that even tech titans are throwing punches at each other in public. Did you miss it? Here’s what happened between Marc Andreessen, Jack Dorsey, and Elon Musk.
There’s a lot to unpack so let’s line this up: Marc invented the first web browser and runs a16z, the most successful VC fund in startup history. Elon invented online payment with PayPal and now has launched so many Starlink satellites, they’re blocking telescopes. Jack quit his invention ‘Twitter’ to run point-of-sale payment processor Square. Now Marc is able to out-invest Jack in Web3. Elon is trolling both by pushing Dogecoin as the default currency on the web. Poor Jack launched a legal defense fund to keep lawyers at bay.
So what do legal and lawyers have to do with Web3? Besides frivolous claims, each fundraiser is good business for more than a few lawyers. However, that is not why we need them. We need legal professionals to build constraints into the protocols. And please no legislation, please! It doesn’t work, and will only make it much worse. Everyone is suffering every single time we have to click a cookie pop-up away. Laws need to be code, like a smart contract. And we need legal engineers to come in and write those contracts. Not Marc, not Jack, certainly not Elon, and under no circumstance, Meta.
Originally published at https://www.legalcomplex.com on February 10, 2022.